Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2017

Note 6 — Goodwill and Intangible Assets

Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. The following table presents the changes in goodwill balances during the years indicated:

	Gross carrying		Accumulated
	amount		impairment		Net amount
	(in thousands)
Balance at December 31, 2015 and 2016	$	238,108	$	123,200	$	114,908
Acquisition	192,223		—		192,223

Balance at December 31, 2017	$	430,331	$	123,200	$	307,131

The Company performs its annual goodwill impairment test at the beginning of the fourth quarter each year. As the Company maintains a single goodwill reporting unit, it determines the fair value of its reporting unit based upon the Company’s adjusted market capitalization. The adjusted market capitalization is calculated by multiplying the average share price of the Company’s common stock for the last ten trading days prior to the measurement date by the number of outstanding common shares and adding a control premium. The annual test performed at the beginning of the fourth quarter of fiscal 2016 and 2017 did not result in any potential impairment as the fair value of the reporting unit was determined to exceed the carrying amount of the reporting unit.

As a result of a significant decline in the Company’s stock price during the fourth quarter, the Company determined it was appropriate to perform an interim goodwill impairment test as of the end of the fourth quarter. The Company determined the fair value of its reporting unit using both the adjusted market capitalization approach noted above, and a market approach, which was based on a review of comparable companies’ market-derived trailing twelve month revenue multiples. Both approaches indicated the fair value exceeded the carrying amount of the reporting unit and no impairment of goodwill existed at December 31, 2017. The valuation of goodwill will continue to be subject to changes in the Company’s market capitalization and observable market control premiums.

The components of purchased intangible assets were as follows:

		December 31, 2017						December 31, 2016
	Weighted			Accumulated						Accumulated
	Average Remaining	Gross		Amortization				Gross		Amortization
	Amortization	Carrying		and		Net		Carrying		and		Net
	Period	Amount		Impairment		Amount		Amount		Impairment		Amount
	(in years)	(in thousands)
Technology	8.0	$	307,588	$	133,121	$	174,467	$	149,198	$	113,904	$	35,294
Customer relationships	11.4	164,595		39,336		125,259		47,885		28,659		19,226
In-process R&D	—	43,340		—		43,340		—		—		—
Trademarks and tradenames	6.4	30,910		4,321		26,589		2,590		1,948		642
Indefinite-lived trademark	—	—		—		—		2,900		—		2,900
Other	2.0	3,686		3,498		188		2,026		1,710		316

Total	9.2	$	550,119	$	180,276	$	369,843	$	204,599	$	146,221	$	58,378

Other intangible assets primarily consist of patents, licenses, and backlog.

During 2016, the Company decided to reduce future investments in certain technologies and, as a result, recorded a non-cash impairment charge of $54.3 million for the related intangible purchased technology. The impairment charge was based on projected cash flows that required the use of unobservable inputs, and was recorded in “Asset impairment” in the Consolidated Statements of Operations.

Based on the intangible assets recorded at December 31, 2017, and assuming no subsequent additions to or impairment of the underlying assets, the remaining estimated annual amortization expense, excluding in-process R&D, is expected to be as follows:

	Amortization
	(in thousands)
2018	$	54,128
2019	57,071
2020	54,382
2021	40,959
2022	26,009
Thereafter	93,954

Total	$	326,503

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details